Washington Insider-- Monday

Still Fighting About COOL

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Brazil's President Rousseff in Washington Tomorrow

Brazil President Dilma Rousseff will meet tomorrow in Washington with President Obama, with their talks expected to focus on trade and economic development. Both sides apparently are eager to get their relationship back on more normal footing following revelations two years ago by former government contractor Edward Snowden that Brazil was a top target in Latin America for U.S. National Security Agency intelligence gathering.

Rousseff announced earlier this month that Brazil would launch its own three-year national export plan with aims to jump-start a near-zero-growth economy, with an emphasis on removing trade barriers, promoting trade in 32 priority markets, cutting customs-related red tape, simplifying and reducing accumulated taxes along the export production chain, and increasing government financing of exports and export guarantees. Rousseff's government also will continue its battle to contain the country's inflation rate, which currently is forecast at 9 percent this year by the Brazilian Central Bank.

Mark Feierstein, senior director for Western Hemisphere Affairs at the White House, said the United States and Brazil currently do $100 billion in trade, which is double that of just 10 years ago. "And we think that we can double that trade again over the next 10 years," Feierstein said. This week's meeting at the White House could provide a strong basis to achieve that goal.

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House, Senate Take Different Approaches to Funding U.S. Highways

The Senate Environment and Public Works Committee last week unanimously approved a six-year highway bill that would provide about $278 billion to the Highway Trust Fund, create a $2 billion dedicated freight program in fiscal 2016 and increase highway funding by 3% annually. If the bill were to become law, it would provide much needed assurances to state governments that federal transportation funding would available for a respectable amount of time.

Congress for years has avoided making a long-term commitment to highway funding, choosing instead to approve a series of short-term extensions of previous law. In spite of the work done by the Senate panel, that scenario may play out again this year as the House remains on track to pass another short-term extension at the end July, just before Congress leaves Washington for a month-long summer recess.

Hoping to head off what is seen by Democrats as a retreat on highway funding, House Minority Leader Nancy Pelosi, D-Calif., last week said Republicans should plan to get serious about passing a multi-year surface transportation reauthorization bill as soon as Congress returns from the Independence Day recess.

The main problem, as always, is funding. And Congress has yet to agree on how to pay for the transportation bill which, in the Senate version, would total $278 billion over six years. It is unlikely that Congress will be able to identify a source of funding that does not include some sort of tax increase.

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Washington Insider: Still Fighting About COOL

There was little surprise involved in last Thursday’s Senate Agriculture Committee hearing on the U.S. country of origin labeling law. Most representatives of the U.S. livestock and meatpacking industries told lawmakers that they should reject a Senate draft bill being promoted pushed by Sen. Debbie Stabenow, D-Mich., that she that hopes would keep COOL rules for beef and pork alive by making them voluntary.

Meat industry representatives were unimpressed, and told the committee that Congress's first priority should be a complete repeal of COOL in order to be sure that Canada and Mexico cannot impose retaliatory measures against the U.S. economy. They also emphasized that efforts to agree on voluntary labeling would create more uncertainty for U.S. producers.

Those arguments were reinforced by responses from Canada and Mexico who urged key lawmakers to reject the proposal and follow the House in voting for total repeal. A new voluntary program will not end their opposition, they noted.

Industry spokesmen were highly vocal in their opposition to COOL and any of the proposed modifications — and, particularly scathing in their criticism of COOL. “It's time to go ahead and repeal it,” Jaret Moyer, president of the Kansas Livestock Association testified. He added that, “Proponents of COOL have long said mandatory labeling would cause the U.S. consumer to actively seek out and pay more for U.S. beef. Six years into implementation, it is clear this is not the case.”

Moyer cited a Kansas State University study that found while consumers often say they want to know where their beef comes from, they don’t consider it in their purchasing decision. “From burdensome record keeping, to line sorting and segregation, and to the actual label itself, all segments of the beef industry have been paying the costs of COOL since it went into effect in October 2008. All segments of the U.S. beef industry have been impacted negatively by COOL,” he said.

The House bill would repeal COOL rules for beef, pork and chicken but does not contain language on a voluntary labeling program. House Agriculture Committee Chairman Mike Conaway, R-Texas, said he does not think the government should get involved in a voluntary COOL program and the industry should create a label if there is demand.

Canada and Mexico have requested a combined $3.2 billion in retaliatory trade measures against the United States if COOL is not brought into compliance with the WTO decision.

Senate Ag Chairman Pat Roberts, R-Kan., said Congress must act quickly in repealing COOL or face dire retaliation. “If you take anything away from my remarks today, I hope it is this: Facts are stubborn things, and whether you support COOL or oppose COOL, the fact is retaliation is coming.”

“Congress had the opportunity to fix mandatory COOL in the 2014 farm bill,” Roberts recalled. “Some wanted to wait out the WTO process. Well, that process has played out, and there’s no more time to wait.”

“The House has moved quickly to prevent retaliation by repealing mandatory COOL for meat. Now the responsibility falls on us,” Roberts told the panel. “The Senate must act prior to the WTO’s authorization of retaliation. The WTO stove is hot, and we don’t want to touch it.”

The combination of House action on COOL, plus Canadian and Mexican opposition, along with U.S. industry opposition is seen by many to suggest that full COOL repeal is likely –– with perhaps authorization for a private industry approach to voluntary labeling.

As for Canada and Mexico, their responses clearly indicate they want a simple solution to the U.S. COOL rule: Repeal it.

Lawmaker response so far seems to provide at least some evidence that the Senate will follow the House lead and provide the reform the Canadians and Mexicans want, Washington Insider believes.


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(GH/CZ)